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Cheeks said:1) When you receive rent it is not the total rent, it will be minus management fee's, repairs, strata, etc.. Is it right to think that from the PM's statement you can reimburse your rental income A/C these costs from the Property A/C?
Cheeks said:2) I then use this LOC (Property A/C) to pay my interest for each of the [investment] loans (IO and LOC’s). The interest incurred on the LOC (property A/C) is deductible and I can capitalize this interest and it is still deductible?
Cheeks said:3) I am planning on LOE in the near future but it was my understanding that I would have to record my non deductible and deductible debt very carefully.
Cheeks said:but from what you are telling me everything property related (not PPOR) will be deductible.
Cheeks said:I would then setup another LOC to support my extra LOE life style, this LOC wouldn't be deductible and as it is another LOC I wouldn’t have to be concerned about making sure I claim my deductible and non deductible debt in the correct portions as the whole portion of the loan would be non deductible.
Cheeks said:Basically I think you are suggesting LOR (Living Off Rent) without the draw back of having to sell properties to make everything +CF?
Cheeks said:Am I on the right track or have I missed something
Originally Posted by Cheeks
1) When you receive rent it is not the total rent, it will be minus management fee's, repairs, strata, etc.. Is it right to think that from the PM's statement you can reimburse your rental income A/C these costs from the Property A/C?
Originally Posted by Corsa
No you cant do this.
Originally Posted by Corsa
Lets not confuse things by using statements like Living Off Rent
Cheeks said:I would like to point out that this all depends on your situation but based on the two models and numbers you are better to pump all the rent into running your portfolio and using debt to finance lifestyle.
Cheeks said:Now, using the LOE spreadsheet James posted on here I have produced the following Graphs. One being the standard LOE and one being Corsa LOE.
Cheeks said:Now I understand that the lifestyle costs are not tax deductible but let’s say you get 50% back from the Corsa model, you are still around 250K behind.
Cheeks said:I would like to point out that this all depends on your situation but based on the two models and numbers you are better to pump all the rent into running your portfolio and using debt to finance lifestyle.
Cheeks said:Again I may have missed something so all comments are welcome
Corsa said:Scenario 1
- LOC secured by your PPOR
- You use this LOC to fund another investment property costs - LOC interest deductible
- You use this LOC to fund another investment property interest repayment - LOC interest deductible
- You use this LOC to fund your overseas holiday - LOC interest not deductible
Scenario 2
- LOC secured by your Investment Property
- You use this LOC to fund another investment property costs - LOC interest deductible
- You use this LOC to fund another investment property interest - LOC interest deductible
- You use this LOC to fund your overseas holiday - LOC interest not deductible
Best Wishes
Corsa
Corsa said:Diagram of Structure as attached.
But if an investor also has a margin account with unused margin, can one use this to pay off the credit card?Corsa said:[*]You use this LOC to fund your overseas holiday - LOC interest not deductible
RichardC said:But if an investor also has a margin account with unused margin, can one use this to pay off the credit card?
Thommo.
ps. This is not of direct interest to me. I don't do it.
RichardC said:But if an investor also has a margin account with unused margin, can one use this to pay off the credit card?
Thommo.
ps. This is not of direct interest to me. I don't do it.
fgler said:What the argument point is the rental income generated by the IP must go towards paying the outgoing costs (interest, fees, maintenance cost). If the rental income is not enough to cover the outgoing costs, then any money borrowed (and its interest) to cover the shortfall could be tax deductible. Please correct me if my accountant is wrong.